Volkswagen to supply engines in exchange for Navistar stake: Sources

Volkswagen has agreed to supply engines to Navistar in exchange for a stake in the truckmaker, one of the sources, who declined to be named.FRANKFURT: Volkswagen's trucks division is close to announcing a partnership with U.S.-based rival Navistar International Corp, three sources told Reuters, in the example of a deal driven by emissions regulations.

Volkswagen has agreed to supply engines to Navistar in exchange for a stake in the truckmaker, one of the sources, who declined to be named, told Reuters.

The deal will be announced as soon as Tuesday, the sources said. Volkswagen declined to comment, while Navistar was not immediately available for comment.

The financial burden of developing next generation engines to meet new emissions standards is forcing several carmakers to pursue partnerships and technology deals.

in exchange for delivering next generation engines and electronics that meet the latest emissions rules.

Volkswagen's commercial vehicles division is trying to build itself into a global truck manufacturer having absorbed Germany's MAN and Sweden's Scania, while Navistar is looking for a technology partner to build engines that can meet ever more stringent emissions rules.

For Volkswagen, Navistar is seen as an attractive target because it has a large North American dealer network, something the German carmaker lacks.

Navistar, which has a market value of around $1.15 billion, has been on the lookout for an engine partner ever since 2010 when it failed to get approval from the U.S. Environmental Protection Agency for its heavy-duty diesel truck engine.

The two companies have been in talks about a potential tie-up for years, but an emissions cheating scandal has left the Wolfsburg-based carmaker suffering from management turmoil following the ousting of its chief executive.Xi Jinping says Japan should exercise caution on South China Sea

BEIJING: Chinese President Xi Jinping told Japanese Prime Minister Shinzo Abe on Monday that Japan should exercise caution on the South China Sea issue, China's state news agency Xinhua reported, as the two met on the sidelines of the G20 summit.

Ties between Asia's two largest economies have long been overshadowed by arguments over their painful wartime history and a territorial spat in the East China Sea, among other issues.

Beijing has also accused Tokyo of interfering in the South China Sea, where China and several Southeast Asian nations are embroiled in an argument over ownership.

China has refused to recognise a July ruling by an arbitration court in The Hague invalidating China's vast claims in the South China Sea and did not take part in the proceedings. It has reacted angrily to calls by Western countries and Japan for the decision to be adhered to.

Xi, meeting Abe in the Chinese city of Hangzhou, said Japan should "exercise caution in its words and deeds" on the South China Sea issue, Xinhua said.

China and Japan should also properly handle the East China Sea issue via dialogue and consultation to "jointly safeguard peace and stability in the region", Xi added.

The two countries should "put aside disruptions" and bring their relations back on the normal track as soon as possible, as ties are still "troubled by complications at times", Xi said.

"Both sides should bolster their sense of responsibility and crisis awareness, and work to build on the positive elements of bilateral ties while putting a lid on negative ones, in order to ensure stable improvement of relations," he added.